Gov. Jerry Brown stands up to union on pensions – Orange County Register

As communities across California struggle with mounting pension burdens, Gov. Jerry Brown has come to the defense of pension reform in a state Supreme Court case.

In Cal Fire Local 2881 v. California Public Employees Retirement System, the union representing state firefighters is challenging a provision of the Public Employees’ Pension Reform Act of 2013 ending the practice of “airtime” purchases.

Airtime refers to fictitious years of public service used to calculate the size of their pensions. Prior to the passage of PEPRA, government workers could purchase as much as five years of credit for public service they didn’t necessarily do, thereby manipulating a system intended to provide a pension in exchange for public service.

Like other forms of pension spiking, the purchasing of airtime added significantly to the state’s unfunded pension liabilities due to a mismatch between how much in benefits a retiree receives versus how much those benefits were funded. It also enabled many government workers to retire early, which caused problems throughout the state.

“Ending the costly, imperfect practice of selling additional ‘service credit’ untethered to service was necessary to re-align pension benefits with public service, eliminate a cause of premature retirements, and address a well-established source of unfunded liabilities never intended by the legislature,” the Brown administration argues in a recent court brief.

Once seemingly iron-clad, the airtime-padding has come under greater scrutiny in recent years, including a lower-court ruling regarding the airtime case. “While plaintiffs may believe they have been disadvantaged by these amendments, the law is quite clear that they are entitled only to a ‘reasonable’ pension, not one providing fixed or definite benefits immune from modification,” the Third Division of the First District Court of Appeals ruled.

While governments should honor benefits for time already worked, they should have the flexibility to modify benefits moving forward. Tying the hands of governments to adjust to new financial realities doesn’t serve the public and doesn’t even serve public employees in the long-term, as they too can become victims of pension crowd-out.

Ending the practice of airtime purchasing and other forms of pension spiking have been critical in reining in out-of-control pension costs, though clearly problems persist.